LAHORE: The urban transport system being launched by Punjab government is in jeopardy as the federal Ministry of Petroleum and Natural Resources has not yet allowed the Punjab government to make arrangements for the storage and dispensation of CNG during the loadshedding days at the selected bus depots.

The Punjab Transport Department had approached the Ministry of Petroleum and Natural Resources seeking uninterrupted CNG supply for CNG-fueled urban buses. Since the entire urban transport system of the province is squarely based on uninterrupted CNG supply, the Punjab government is working on technical solution for storage and dispensation at selected bus depots for which it had approached the Ministry of Petroleum and Natural Resources.

While the Punjab government is waiting for a positive reply from the federal government, the Punjab Transport Department has also moved a summary of “Policy Initiative Package” for the approval of provincial cabinet in order to complete the other equally important exercises attached with the programme.

The Policy Initiative Package, which was introduced to rejuvenate the urban transport system by facilitating bus operators for induction of new busses, envisages 80 per cent upfront payment by the Punjab government while operators will pay 20 per cent amount upfront as equity (capital subsidy).

Furthermore the government would give 20 per cent subsidy to the operators and 60 per cent amount of loan would be arranged through a financial institution recoverable from the operators over a period of five years. For 60 per cent funding to be provided by the financial institutions, the government would provide 30 per cent backstopping arrangement in case of default. The policy initiative envisages, operational subsidy to cover up the losses and ensure 20 per cent return on investor’s equity, payment of Rs400,000 a bus for refurbishment of existing buses and provision of parking facilities/bus depots on concessional rate subject to availability of land.

According to the summary, the Transport Department have already started implementation of this incentive package as 20 per cent upfront subsidy has been paid to M/s BUSCO and M/s First Bus Companies on purchase of 111 and 30 buses respectively under their own arrangement for operation in Lahore. Operational subsidy to the tune of Rs7.5 million @ Rs1,250 a bus a day has been paid to different bus operators while Rs6 million has been paid on account of refurbishment of existing buses of different operators.

For procurement of dedicated CNG AC buses, LTC has selected Ms ANKAI of China for the supply of 575 buses. For first batch of 100 buses, 100 per cent payment has been made by the government as bridge financing and Letter of Credit (LC) established in the name of M/s Ankai.

The buses will be leased to the prospective operators through Bank of Punjab (BoP) which will act as an agent to government of the Punjab. For remaining 475 buses, LC will be opened after receiving 20 per cent down payment from the prospective operators.

The Punjab Transport Department is also negotiating with different operators to lease out the buses, six companies for Lahore and nine for other cities, which have shown interest for operation of 255 and 140 buses respectively. However, no one has made 20 per cent down payment so far. Both Secretary Petroleum and Natural Resources Ejaz Chaudhary and Secretary Punjab Transport Mohammad Yousaf were not available for comments.